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What is business process outsourcing? < Business Articles By Mast Business Directory

What is BPO?

Business process outsourcing (BPO) involves the contracting to a third party to resolve the operations and responsibilities of specific business functions. Organization delegates the non-core business function to 3rd party service provider. Non-core business function means an operation which is not the regular operation of the entity.

BPO industry cannot survive only in one country as the meaning o BPO is outsourcing your business needs. They main reason why you need to outsource your business is that you can save a lot of money and expanses in this way. Usually business is outsourced at such location where you can find skilled professionals who can handle your business affairs and you have to pay them less as compared to the professionals of same qualification who are working in your country. In last few years BPO industry has become a very big and in fact a giant industry in economy of many countries and most of these countries are situated in Asia. Namely India, Pakistan, China, Bangladesh. These countries are rich of skills and such people who give their full devotion to their work and if you are some one who is living in a developed country then this BPO market is a golden point for you to groom your business. you can out source all those business process to these countries which can be managed here in a better way and definitely well less cost.

If we take example of USA, Canada, UK and other such countries that stand high in developed countriesí list then business people in these countries have a great opportunity to hire professional workers in such Asian countries that are rich of talent and many people need jobs in those countries.

Example:

(1) An insurance company may give their claims processing program to any third party who have the specific knowledge in dealing.
(2) A bank might outsource their loan recovering processing to a 3rd party.

Companies are looking at BPO and are hoping to achieve cost minimization by handing over the work to a third-party. Cost savings can be achieved because the 3rd party has specified skills in doing the work and have different ways how to attain the satisfied result in the given time period.

Nowadays, BPO is a rapidly growing industry. The demand of BPO is increasing day by day; therefore, many BPO industries are located in the center of the business market. BPO is a steadily increasing trend in many countries. Large multinational companies, which are dealing with the technology, are especially engaged in the process of outsourcing. This is primly done to cut their cost and to boast up their revenue.

Reasons why organization wants to outsource their function from 3rd party.

Cost savings: The overall cost of the service of the business is reduced.

Focus on Core Business Resources: Through this, the organization will get the opportunity to focus on the task in which they are expert.

Cost restructuring: It is a measure that compares fixed costs to variable costs. Variable cost is that cost which changes with operation whereas, the fixed cost remains the same no matter how many operation you do.

Improve quality: Change in quality through contracting with those who are best in the specified field.

Knowledge: Wider experience and knowledge by dealing with experienced workers.

Contract: Services will be provided according to the contract. If services are not up to the agreed standard, then the financial penalties and legal actions are taken by the organization.

Access to talent: Dealing with the talented employees of 3rd party, who provide their services for your organization.

We can outsource almost anything. You might don't know about it but it's true in reality. For instance, few days ago, when I was sitting in the kitchen, my wife pointed at the tap that was leaking from many days. I tried to fix it but it didnít make any sense to me. I realized that I had to outsource that part, so I called the plumber.

Advantages of BPO

An advantage of BPO is it increases a companyís flexibility. Most services provided by BPO helps a company in becoming more flexible by converting fixed costs into variable costs. Outsourcing provides flexibility to the firm in its management and it may reduce the cost and time to major environmental changes.

BPO contributes to a companyís flexibility by letting it to focus on its core functions, without increasing their cost. Fixed and experience employees are then allowed to focus on the administrative work and can engage their time and energy in developing the firmís core operations. Focusing more on the functions in which you are expert and leave the rest to the 3rd party because they have the expertise in that particular field.

BPO increases the flexibility by reducing time and money and increasing the speed of the business operation. Techniques such as linear programming and inventory management can reduce the time cycle and inventory levels and can give us up to date knowledge about the inventory level. This can increase efficiency and cut costs. Supply chain management mange the upstream and downstream value added flow of the goods. With the effective use of supply chain, the partners and the business process outsourcing increases the speed of various business operations.

BPO helps to transform rigid organization to smooth organization. A company can avoid sudden mishaps by offering the 3rd party to resolve their problem from their experience and expertise. BPO helps the company to grow at a faster pace because it will be less worried about the large capital expenditures for the people or equipment for solving a problem which the third party is already providing with much more guarantee of completion of work up to the standard. The Above-mentioned points are in the favor of BPO and they increase the flexibility of organizations, management .One should be careful in making agreement with the outsourcing firms because there are issues, which are against these advantages of BPO.

Limitation/Risk/Disadvantages

Finally, your decision is in the favor of outsourcing. Research and studies showed that about 20% to 35% of outsourcing contracts are not revived once they expired. Most of the customers are not satisfied with the quality and/or price of the services in those cases. In some cases, the companies decide to cancel the contract and rehire their old employees to do the same work which was done by outsource. In some cases, most of their old employees came back but they wanted a higher wage than before. However, some organizations believe that the company should not consider outsourcing again. They think that it must be different this time. They are curious to see that what will happen next.

The manager who has little or no experience in dealing with the 3rd part outsourcings will lose control over the project or at the part that you chose to outsource. This is the problem that might frighten almost any manager in the organization. There are some challenges which any business has to face while outsourcing. There are some risks which the managers have to take while running the management. For minimize the risk, the manager has to be extremely careful while studying the background of your 3rd party outsourcings organization.

Outsourcings organization calls your clients on your behalf but telephone conversations are bad and can in result in creating some misunderstandings. Emailing and communicating with your clients via some instant messaging program online takes even more time and more cost to get the work done and at the end you'll have to deal with an endless amount of emails to be sent and received from the clients.

If you are dealing with an overseas outsource organization, then the time zone problem will create a hurdle. Imagine, you have just arrived at your office and your service provider employees are going to leave.

BPO Companies

Advance collateral Solution Company.

Advanced Collateral Solutions provides a wide range of automated valuation models, broker-driven products as well as appraisals and appraisal review products.

Americaís info Mart Company

They provide the service of Broker Price Opinions, Appraisals, field services, inspections etc.

How BPO Companies work

The BPO service provider has practically saved the nation from economic downfall during the recent worldwide economic recession. BPO companies worked hard to survive and the BPO workers stayed secure in their jobs when the unemployment rate zoomed up. The BPO industry is quite courageous and is supporting the worker to survive in the hard times. BPO industry has been greatly affecting the lives of the common people. It made significant changes on how people should perceive the professional and personal lives. Personal success gave opportunity to the people to open new remarkable adept in their profession or the field of work.

Conclusion:

Will outsourcing really give profit to your business? This depends on how you deal with your outsource organization.

However, you should be very careful in selecting and examining the vendor's expertise, examining the experience of the vendor in respective field, negotiating and renewing of the contract and monitoring the project implementation while it is in progress. In this case, outsourcing IT development will be rewarding and the return on investment might be the greatest one that you ever had.

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